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tv   CNBC Reports  CNBC  August 21, 2009 8:00pm-8:30pm EDT

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oil at the best levels of the year. now energy stocks and certainly those oil stocks. schluvberger up on the surprise decrease in oil inventories this week. and oil prices definitely today closing at the highest levels of the year. don't forget about that technology story because it has been a serious one since the march lows and apple was a big story today, thomas weisel raising the estimates there after a meeting with management, they love the long-term growth prospects for apple, take a look at shares today, that stock is up nearly 100% year-to-date. all that bad news about retail, don't tell that to aeropostal, take a look at this stock. off to the races today, off to the races today, in fact, up 146% year-to-date. same store sales up 12%, their guidance for the current quarter was ahead of estimates. that's right, you heard me right, a retailer ahead of
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estimates. that means they actually expect good things for the back to school season. certainly nice to see a retailer with that kind of news this evening. are we headed to 10,000? with t.j. institutional services, the bear is michael pinto and with the delta global advisers. michael, you are the bear in this discussion. there's so much momentum here. how are you getting off the train now? >> a little uncomfortable, huh? let's see, what was the progenitor of this rally? it was based on the fact that the dollar has lost 13% of its value since march. that's our serious destruction in the value of our currency. and the purchasing value of our dollar, but i think that is about to change and that's going to stall this rally and maybe bring us down to a 10 to 15% correction. and here's why i think the dollar is going to strengthen. because the money supply growth has stopped dead in its tracks.
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the balance, the monetary base has been contracting at a 26% annual rate, m-2 is flat, and banks are no longer lending money. they stopped lending. year-over-year growth of loans and leases is now negative. this is a bear market, it will continue on the downside, and if it goes to 10,000, i'd short it aggressively. >> i don't know, jim, there's a lot of people talking about the dollar weakening, and some people even predicting a freefall for the dollar. >> i'm not predicting a free fall yet, but i think it's a danger we have to look at. the government has thrown so much stimulus at it and it's trending lower. just yesterday in the shanghai daily, some news from a china official says china is wary about fiscal responsibilities in the united states or something like that. when there's talk of that that other nations might not look to the dollar to be their store wealth, going to look somewhere else, then all of a sudden we could go into a free fall, but as long as that talk is out there, i think it's going to keep a lid on the dollar.
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>> i love your name, i love the way, you know, mr. uirio, i love your last name, by the way. let me ask you a question. isn't that already known? don't we already know that? >> sure. no question about it. >> what isn't known is the fact that money supply has completely dried up. that's -- that's going to put a head wind on this market. let's talk about what's going to occur in the future not what everybody already knows. long-term the dollar is cooked. i understand that. i'm one of those first people to talk about that. but let's just talk about for the next few weeks, we're overextended and there's going to be a rally in the dollar. >> no, i thought it was -- >> okay, you go. >> let me turn the discussion to china. because china already came up and there were real questions this week about china actually leading this market. it was first a rebound, it was first the top out. is the chinese market leading our market? >> is that for me? >> yeah, jim. >> yes, yes -- >> for me.
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>> jim. >> no, definitely. but when this chinese -- when the shanghai composite was off a couple days ago, people were worried, they're back in a bear market, this is a market that rallied 100% in that, a year ago rallied 300%. we've got to suspend the rules for what we consider a bear market and despite the fact people say their gdp numbers are monkeyed with. they're going to make sure that stock market rallies. is this leading us? yeah, i suppose a little bit. i don't think it's the only thing, but i definitely think it's a factor in what's leading us. >> and also global stimulus is on the wane. australia's talking about hiking rates. >> michael -- >> china is tightening reserve requirements. >> okay. my turn. >> michael. >> when we -- do you really think this administration is going to stop throwing money at any little problem that they see? if they get some bad economic data in three days, do you not think they're going to throw more money at it? that's irresponsibility, why do we think it's going to stop right now. >> jim, i agree with you 100%, but you can't throw money at the
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problem in three days. it takes time. >> they can talk about it. talk about the perception. >> i want to wait. and your listeners should do this, you should wait for the monetary base to start to increase again, because ben bernanke is convinced he's done enough, the economy is healed and he's healed nothing. the debt of the nation continues to increase. so we have not solved anything. you're going to have a double dip recession in 2010 and i would wait for the base to increase, then the dollar will continue its downward momentum. >> jim, are we having a double dip recession? is michael right? >> i think there's a solid chance -- i think i'd put a 30% or 40% chance that we do have another leg down a recession. i'm not sure it's going to explore the depths -- >> is that price in? is that price in 17 times 2009? so why are we selling it? i got you to agree with me. >> no, i know, but i think you and i are talking about totally different time frames on both of these markets. i think we can look at this stock market in particular and say it's being caused by a weak
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dollar and say it makes no sense, there's a disconnect between the economy and stock market. so what, that can stay there a lot longer than we can fight it and the same thing can happen to the dollar. right now the dollar -- and you can come up with your money supply argument and that's a great argument, i never heard it before too, but it doesn't matter, people are selling it. it doesn't matter -- >> does it matter the total loans and leases are negative year-over-year. does that matter? >> of course it matters, does it matter that there are 6.24 million people collecting unemployment and that the four-week moving average -- >> -- all of those things. >> there's more people now than total unemployment. >> you and i can be the two right people who stand in front of the freight train that's the market and say you're all wrong. >> are you a day trader? >> no, i'm not just a day trader. i look medium term and -- >> sometimes you're a day trader, but you've got a lot more than that to you jim iourio.
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there's much more tonight on "cnbc reports." hurricane bill is lurking off the east coast. the rip tide is dangerous for anyone hitting the beach this weekend. from the carolinas, right on up through maine, and canada's offshore oil industry could be in over its head. we'll get the cnbc cast in a minute. also tonight, the big decision on big ben. is he going to stick around for another four years? or will the president bring in a reliever? and a more important question, what's it all mean for your money? also tonight, don't miss "options action" at 8:30. we're back right after this.
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if you're heading to the beach on the east coast this week, a word of advice, stay on the sand. hurricane bill is whipping up the undertoe. waves could be as high as 20 feet, but that's not the only problem caused by hurricane bill. paul goodloe with the weather channel.
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>> we're watching hurricane bill, the good news is, hurricane bill at one point was a category four hurricane with the same winds 135 miles per hour. right now it's weakened to a category two hurricane, but still a strong hurricane at 105-mile-per-hour sustained winds moving 20 miles per hour. and it continues to turn up a huge amount of waves that are heading into the u.s. and crashing across the beaches right now. again, here's a close up view. this is a reason why it's far weaker than 36 hours ago on category four. a lot more drier air on the west side of this hurricane and that little blip right there, that's the island nation of bermuda. they're getting pounded right now by strong winds, heavy rain, also the waves have been some 30 to 35 feet, getting higher as we head into your saturday, but the hurricane should pass them by throughout the day on saturday and then accelerate. it should not directly impact landfall, but nova scotia they have a decent oil and gas industry there, they will be
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impacted, but if they are, they will be on the west side of the hurricane. that's the weaker side of the hurricane versus bermuda, which is on the stronger side of the hurricane, getting a lot more effects in terms of direct hit, in terms of heavy rain and strong winds. nova scotia kind of getting brushed by and also the hurricane rapidly speeding up as it passes by nova scotia, as well. in terms of us here on the east coast, heading on the beach, you want to go, but stay on the sand because the waves easily could get 20 to 25 feet. but again, they should be coming down as we head toward your sunday afternoon. scott? >> paul, thanks a lot. have a great weekend, man, thank you. >> you too. energy traders keeping an eye on the storm and our rebecca jarvis keeping an eye on the energy traders at the nymex today. >> reporter: thanks so much, and while the weather patterns could certainly create a new sense, they're not creating any fundamental reason traders say to be bullish or bearish in terms of these markets. in fact, what they're looking to in the energy pits continues to be a matter of the dollar
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weakness, the prevailing force here in the dollar, sending oil prices higher on top of that stocks continue to trade in tandem with oil. and lastly, the economy, we're hearing new signals that the economy may be improving and that could spell new demand for oil prices going forward. on the natural gas front, supplies are so heavy and strong in natural gas that traders say they foresee a long ways out before prices really turn around here. >> all right, that was our rebecca jarvis. the energy analyst and senior vp, also a cnbc contributor, john, good to see you this evening. >> good evening. >> what's driving oil? is it demand or the dollar or is it inflation? >> it's a combination. it's almost a list of elements here that are combining to push us higher and higher. this falling dollar certainly an element, but we've also got a reading from china during the week that they imported a record amount of crude oil in july. it's my position that the
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economic activity we're seeing now is sufficient to sustain these levels and to the extent we see more recovery around the world, we're just going to go higher. the chart looks great technically, as well. it will be $80 to $85 a barrel within the next week or two. >> why the dichotomy between oil and natural gas? if oil is at a high, natural gas is at a seven-year low? >> that's because natural gas is really a much more siloed commodity. you can't -- it's still not as shippable, distributable, fungible around the world. and there has just been a massive amount of natural gas drilling undertaken over the past several years because of high prices wooer, we're produc record amount than ever before and with industrial demand being down the way it is, with the weather being the way it is this summer, nothing to help it. >> all right, john, thanks. >> thanks. >> let's get back to that bull and bear debate. harry dent is author of "the
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great depression ahead." the editor of etf trends.com, senior investment strategist. harry, i'm going to begin with you. you're kind of the odd man out here, it's three against one. as i said before, there's a lot of momentum behind this market. everybody says it has to go down, yet, it keeps going higher. >> yeah. i think it probably will go higher very near term, but we say get out by labor day. this is a bear market rally, has all of the characteristics. you have to get up 30,000 feet to really see what's going on here. the greatest credit bubble has peaked and deleveraged and you cannot stop this once it starts, ask the japanese. and more important, the largest generation in history, the baby boomers are moving from spenders to savers, this is something we've been predicting for a long time. ask japan, once that starts, you can't stop it either.
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>> when i wake up on monday morning, is it moving higher? >> you can't stop the trend. you can't fight it. we've had a huge run off the march 9th lows, and there's $4 trillion on the sidelines and everybody's sitting on the beach and not paying much attention to the market. when they get back after labor day, i think people are going to look at their 401(k)s, going to look at their brokerage accounts and say i'm missing this thing. >> what's going to get that money off the sidelines, allen? >> well, i think what you'll have to see is people to look at these ten-year treasury yields at about 350 and deciding that's really not going to get them where they want in retirement and look at the stock market that's up 50% and they're thinking they're probably in the wrong spot. >> matt, does this market make it to 10,000 before we see that pullback? >> i think very easily, you know, we really ratcheted it up today with the settlement of options. and, you know, the bears won a couple of days on monday and
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tuesday, walked in it was definitely a fur ball, a volatility was exploding, and then wednesday morning, someone paid the highest relative price for options in the s&p 500, but then we went straight up from there. so i think the momentum, especially with the economic news this morning is definitely on the bull's side. >> harry, you have to admit, some of the housing news has been better. i know everybody wants to point to that past earnings period and say it was cost cutting, it was cost cutting, the revenues are terrible, but sequential revenue growth is actually improving, so there are some signs there to sustain some more momentum in the market, right? >> i tell you, we predicted this when our book came out late last year, there would be a rebound, government stimulus would come in, but it would not last because consumers would not come out. baby boomers are tapped out, going in towards retirement, they're scared to death now that they've seen the retirement assets go. and just demographically, the most predictable thing, they're going to move toward savers, they're not coming back, this is going to be a short-lived stimulus. we expected this, expected the market to bounce to 9,100 to
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10,300 between late july and early september, we're right on track of that. we think we're toward the end of this. i agree, i think it's going higher first, but not much longer. >> i want to agree in part, actually. i think retail spending is going to be a little bit subdued, was you can't bet we won't have economic growth going forth. >> i will take that bet. i will take that bet. >> we will mark that downright here and we will revisit that. we'll have to leave it there, though, you guys have a great weekend. next up, will he stay or will he go? while the fed types wrap up their stay in jacksonhole, economists all over the world are waiting and wondering, we're talking about that and what another four years for ben bernanke will mean for your money. two minutes away. and "options action" 8:30 eastern. we are back in a flash. woohoo!
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listen, that beret is really not hot. i am all roots and no time. i gotta run. no running! let's touch-up those roots in 10 minutes! root touch-up fixes roots or grays that pop up between regular colorings. i feel so much better. root touch-up by nice 'n easy. your right color. now to the talk of the town from wall street to washington and especially wyoming. will fed chairman ben bernanke be reappointed? david goodfriend worked in the clinton white house, chris wilson is the founder of the wilson research strategy, mike
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pinto back to talk about how it's going to impact your money, whichever way, in fact, it does go. david, good friend, let me begin with you. how could president obama not reappoint ben bernanke? >> well, i suppose the only scenario i can think of is that somebody in his inner circle is dying to take that position and lobbies and tries to get the job. but let's face it, this decision will be viewed as a referendum on the state of the economy no matter what. and the president knows that, and by all accounts, the economy has really turned the corner and ben bernanke along with geithner, along with summers, they all deserve credit for that. if the president were to say, no, i'm going to push you aside, inevitably it would be viewed as a negative vote and -- >> it would be looked at as political, right? it would be looked at as a political move? >> again, i think it would be looked at as a referendum on the economy, and this president is all about the economy going up and it is. >> i don't know if it would -- >> chris, is that the way you read it? if he gets rid of bernanke, is
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it going to look anything other than a political move? >> no, it wouldn't be anything but political, one of the few times that david and i agree. because i think the situation is that he has to reappointment, if he doesn't, it sends the absolute message to wall street and main street and what you end up with, go back and look at what obama said, you don't want to waste a good crisis. let's go in and perpetuate and say look, we've done everything we can. he's got to keep bernanke in there and i think that's clear and that's what came out of it today. >> he might replace him with larry summers because he didn't think that bernanke destroy the dollar fast enough it's down 13% since march alone. let's talk about something else. why do we worship central bankers? what's the only two things they can do? they can print money and buy financial institutions assets or they can exchange treasuries for an inferior financial -- >> michael, michael -- why -- >> okay, you disagree with me, where am i wrong?
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>> -- the fed? >> number one, the fed is top cop when it comes to banking. >> they were really all over the housing bubble. they did a great job. >> don't disagree with me alan greenspan went on record and said i put too much faith in the market. he screwed up. >> by going off the gold standard or at least behaving like we're on a gold standard. we should limit money growth to increases in the workforce plus increases in productivity, and that's never 20%, and that's what money supply growth was back in the early part of this decade. >> michael? michael -- >> where was ben bernanke? and he was on the fomc committee when alan greenspan served, where was he? why did he open his mouth? >> all of that said, michael at the end of the day, does obama reappoint bernanke? >> i -- well, i'm not sure. thank god i'm not part of this administration. how do i know? >> you know! you have to. >> all right, how about --
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>> what does it really? does it really matter? if they replace him, they'll replace him with summers who will destroy the dollar. >> it doesn't matter. how about if we just close down the whole institution. >> let's close the segment because we've got to go. >> all right. >> we're back, see you in a second. and "options action" 8:30 eastern.
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a lot to watch for next week on cnbc. monday we'll see if the markets can keep the roll rolling. tuesday, watch for case-shiller's housing numbers and consumer confidence.
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wednesday, new home sales and durable goods, that is all for us tonight. have a great and safe weekend. now stay tuned for "options action" with melissa lee. that is coming up next. don't miss it. we'll see you next week. welcome to "options action" your front row seat to the smart money. i'm melissa lee, here's where the action is tonight. breakthrough. stocks bust the training range, but does the smart money buy the rally? we'll tell you. game on, why some options traders are playing this name for a takeover, but should you take it to the next level? we've got the answer. and the up side call. perfect aim with target earnings. >> what i want to do is buy an august 42 44 call spread.
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>> now they set their sights on dell. "options action" starts right now. welcome to the show, these are the traders on the desk at the home of the world's third largest options market, that, of course, would be the nasdaq market site in the heart of new york city and across the nation in the windy city of chicago and the city of brotherly love, philadelphia, the white flag is waved. bullish comments and housing data, stocks to new year highs after a busy friday. does the smart money see the summer of love continuing? let's get in the money right now. and the breakout that stock investors prayed for has, in fact, arrived. the s&p 500, which was trapped, shackled, back at the 992 and 1,015 levels, showing signs of broadening outs. options traders remained cautious. this is the vix, and it doesn't seem to be able to break below that 24 level. mike, do we need to see a collapse in volatility for you to be a believer? >> well,
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